Creating A Values-Based Bank

EXIN 5 | Values Based Bank

In this episode, Dart Bank President and CEO Bill Hufnagel join Expert Insights’ host, Joe Welu, to share his vision for Dart Bank and how he is leading the bank to be values-based and high-tech, high-touch.

Listen to the podcast here

 

Creating A Values-Based Bank

My guest in this episode, I’m super excited to have him with us, is Bill Hufnagel, the President and CEO of Dart Bank. He’s got an incredible background. He began his career at First National Bank of America in ’94 as a Regional Investment Manager. In ’99, he cofounded Providence Mortgage Company and served as President and CEO. In 2009, the group joined forces with Summit Bank and in 2014, the team joined Dart Bank to which Bill became President and Chief Executive Officer in 2018. Bill has been widely recognized by the Community Bankers Association of Michigan and was awarded the Best Community Banking Award for 2021. Let’s get into it. Bill, thanks so much for joining me.

Thank you, Joe. I’m super excited to be on the show. I appreciate you having me on.

Bill, one of the things I want to get into is how you created a vision for what you believed a modern bank should be like. You started to make that vision reality. Talk to me a little bit about how you formed that vision and what that vision looks like.

First of all, I was able to put a good team around me. I had a vision of what I thought but being able to have a great team of people around me, especially I looked at my senior leadership team. As we’ve come up through the business in banking and through the mortgage company, having owned our business, we felt we were a little bit more entrepreneurial than we are true bankers. It sets a little different way of looking at things.

We felt there was a better way to bank people and take care of people. To serve our customers and do those types of things was the vision that we had. We didn’t see it in the marketplace. We didn’t see somebody that was out there and doing a great job of serving their clients and taking care of them. One of our values is being more forward-thinking with what we can do.

You are always thinking about where things are going and how you can stay ahead of the trends and better take care of your customers.

It’s how we utilize technology. We utilize a lot of the things out there to serve the clients the way they want to be served. That’s rapidly changing with how people do everything and shop for everything else. We assumed banking would be the same way.

It’s a people business at the end of the day. You got people internally that are taking care of other people in a lot of cases. Walk me through your philosophy and even a little bit about your methodology for how you think about building the right team and creating the culture that you want.

One of the things that we did is we instituted. I don’t know if you’ve heard of the EOS system.

I have.

It was a jump for me and something a little bit different. We put that system into place. I had a guy come in, Tom Giberson, who is brilliant and helped us with it. What we’ve done is lean on other professionals. That’s been a key part of our success. We looked at that and said, “What do we have to do first?” First, it was setting up our core values. Making sure we have the values that are set for the entire bank and company. We looked at, “What’s our purpose? What’s that going to be? What’s our niche?”

Setting up your core values and ensure that you have them set for the entire company. Click To Tweet

We’ve established those things. Part of that process is making sure we have the right people in the company. Making sure the right people get it, want it and have the ability to do it. Those are going to be the key things that we did for it. A lot of times great people almost end up putting more on them because they’re great and they do always do a great job but that’s not necessarily fair to them if you’re letting other people stay around that aren’t as great.

We looked through the company and made the commitment that we’re going to do the things that we have to do to make sure that we have great people and that includes investing, training and paying them. Also, holding them accountable to do a great job and giving them a lot of freedom in return. Something as simple as a dress for your day. We got the dress code and a lot of things. You wouldn’t think the pandemic would be helpful but it was. We’re able to institute some of those things that we didn’t have before and maybe some of the flexibility from where you work and some of those things. That was a key part of it.

During the process, so many organizations that are built maybe don’t always have the right structure in place to enable teams to function even if you do have some of the right people and you don’t have the right process and structure in place. Walk me through a little bit about your process. Did you identify gaps where you felt there were silos or where you needed to rip it down to the studs a little bit and re-engineer how the organization was structured?

The one thing is we’re a 100-year-old bank. It’s great. We’ve been around for 100 years but with that, get some things that maybe aren’t the best way to do things. One of my hated things is the way we’ve always done it. I’m fine with that if it’s the best way to still be doing it but if it’s not, let’s do something different.

With that system, we broke down the entire organization and that’s fine. What the system allowed us to do is communicate up and down what we’re doing. We’re holding meetings and people and keeping the whole organization informed of what’s going on. We let them know what is happening. We had a ton of gaps. We had things that were in places where they didn’t belong. Also, people are managing areas that didn’t fit with what they needed.

We’ve had to break that down and move some things, whether it’s IT. We talk about technology as such an important part of moving that and that’s something that directly reports to me because it’s the key to what we do. We moved the managers into places that maybe weren’t managers before. We had a lot of things that we did and shuffling that we did to make sure that we were able to fill those gaps, put the right people in place and empower those people to run their divisions, make decisions and be better.

When you think about values for a second, walk me through what’s unique and your secret sauce in terms of the values that you guys have as an organization.

Our values are pretty straightforward like the values that you’d want in an organization. Integrity is going to be a core one. You have to have integrity in everything you do and that’s going to be important, especially as a leader. If I’m going to make changes and do things, integrity has to be there. They have to trust what I’m doing and then it’s going to be engaged. What we’ve done is an example would be we set up a case op. Our profit sharing is paid in the form of Dart Bank stock. It’s an owner’s mentality.

That goes back to the entrepreneurial spirit. All of our employees are owners of the bank so they treat it differently. That makes for more engaged employees and it’s that positive attitude that makes sure that you’re engaged in what you’re doing. We’re forward-thinking. I wanted innovation but I got voted. They said banks can’t be innovative. I wanted forward-thinking and it’s problem solver and proactive. A lot of people have said, “It’s no first.” Ours has to be, “How can we make that work? How can we get this taken care of for them? How can we do things differently?”

Isn’t that so true though how so many people see the obstacle in companies that we work with? If you talk about, “Here’s how we want the customer experience to be,” they give you fourteen reasons why it’s not possible. What you’re describing to me is what you drive into your organization, how it might be possible and bring me your ideas on how to make things happen. Is that fair?

That’s exactly it. If they do those things, then we’re going to have a lot more satisfied customers. It’s a pretty small world. You get those people talking and telling other people it works. The last one is caring and that’s about relationships. Also, community. We’re a community bank so taking care of the community we serve goes a little bit deeper in that, especially where it’s a relationship business. Life’s a relationship business.

EXIN 5 | Values Based Bank
Values Based Bank: Life is a relationship business.

The more we take care of each other and care for each other, everything’s going to fall into place. That’s where you build a nice and strong culture. The core values were a key part of it and people have to believe in those and want to be part of them. What I’ve told people is if you believe in that and you want to be part of that, it’s going to be one of the best places you’ve ever worked. If you don’t, it’s going to be a pretty miserable existence for you and you’re not going to last very long.

One of the things I’ve learned over the last few years in building our company is that you have to be mindful about hiring the right types of people. If you’re not, it’s problematic. It’s a great perspective. You mentioned relationships and how important those relationships are. From what I know about your organization, you think about building lifelong relationships with your customers. Is that an accurate way to state that?

With all of our customers and employees too but our customers also. It’s making sure that we can have that lifelong relationship with them and that they’re going to look to us as the expert that they can count on and be there with them for the long term.

You want to be that trusted financial partner for all of those different needs that they have. You have a great value system and a great vision for the organization. You’ve put the people in the right places. As you look to translating all of that into how you take care of a customer, do you have any insights into how you have managed to take, for example, high-quality communication with customers? How do you get people that are empowered? How do you translate that into taking care of a bunch of customers? Any key insights or progress you’ve made there?

We have great salespeople and they’re great communicators. That’s what they’re good at doing but what a salesperson usually lacks is sometimes the follow-up and making sure we stay in touch with them. That’s where the relationship that we have with you guys and having a total expert is a key part of what we do because it allows us to stay in front of the people to automate some things. Also, making sure that we’re taking care of them and communicating with them through processes. Not only through that process but after the process and letting them know what’s going on.

A lot of time, it’s being in front of them because when they need to make a decision and they need help, they’re like, “Dart Bank.” That’s going to be the key thing that we’ve done and that’s where the relationship with you guys has been a key part for us. I’m excited because it doesn’t just touch one area. It’s going to touch every area of the bank for us and that was a key part of what we look for when we look for a partner. It’s not just mortgages. We do commercials and everything. It’s a key partnership for us.

It’s an exciting partnership for us as well. We are super grateful to have that opportunity. We look forward to all the things that I know we can work on together. As I think about customer relationships, we’ve done some research. I’ve read a lot of research and I want to see if you agree with me and it sounds like you do. The quality of the communication between you, your organization and your people that have that customer-facing responsibility, the quality of that communication heavily influences how strong those customer relationships are. Would you agree with that?

I agree. What we’re seeing in our surveys from our customers will reinforce that for us so we can tell when the communication’s good and how they rate and what level of service they’ve gotten. If it’s not as good, you’re going to see that too.

It seems overly simple. In business, it gets complex in a hurry when you think about all the touchpoints. If you think about why relationships break down in the first place, take customer relationships out of it but it’s general communication. We see that across-the-board is one of the biggest gaps organizations have with customer relationships and customer loyalty is the way they communicate at scale.

Not necessarily treating or understanding a specific customer and being able to communicate with them on a one-to-one basis. You have a focus on high-tech and high touch. You want to provide a modern experience. Walk me through a little bit about that priority for you and how that’s evolving. We’d love to hear what you’re thinking about that.

Community banks and banking in general were late adopters of technology. They’d wait until the technology was out there. Being a community bank, we’re five years later that we’re finally coming in and offering that technology. We looked at it and go, “We can’t be that.” Every company is a technology company for the most part and then you have a different thing that’s using that technology or maybe the service you’re selling.

We figured we’ve got to be more at the tip of the spear. We’ve needed to be early adopters of technology and utilize that technology. The great thing about being the size we are is we’re small enough that we can institute some of that technology in there at more of a rapid pace and be able to get that out to our customers. We’ve done that. A key thing that we’ve done is to institute a lot of technology.

The key part is how we utilize it and make sure that we have the talent in place to use the systems and get them into our daily process. Our ultimate goal is to make sure we take care of our clients and that we have a great customer experience. Our niche is fast and reliable relationship banking. To be fast and reliable, you have to use that technology.

EXIN 5 | Values Based Bank
Values Based Bank: To be fast and reliable, you have to use technology.

There is no other option, is there?

No. You can’t throw enough people at things to make it that fast. It’s going to be key to have that technology in place.

As you think about checking the pulse of the customers and how they’re feeling about the services, you are pretty proactive. You’re doing surveys out to the customer base.

We instituted a new one that we’re doing to make sure that we’re getting it and then getting out because the first thing everybody does is go to Google. They check those things. We’ve put something in place that has ramped that up to try to get more of that feedback in and more of it out onto the websites, more into Google to get feedback both as individuals and on the bank itself.

I want to take a step back for a moment because it’s one thing to talk about vision and being a values-based organization. It’s another to see that translating into positive business results and growth. You’ve been able to make that turn. Walk me through a little bit of some of the impact that you guys have seen and the mindset around the vision, the culture and all of those things. How’s that translated into the results?

One of the things is where we saw this and anybody can say it. Every company has values. Everybody says they’re going to do a great job for the customers. It’s, “What do you have to do?” That’s part of it. Whether I think we’re fortunate or unfortunate, we had a pandemic come in. For us, the decision-making process was very easy because we went to our values and this is what we do. We did things differently. We protected our people but we never closed our lobbies.

We kept them open because I always told people, “I’ll be there for you when you need us.” That was the time that they needed us and we have their money. You lock your doors and people get a little bit nervous. We kept our doors open. We protected our people. I came to work every day. We were out in the lobbies. We were greeting people. It was safe. We had our plastic shields up. We had our distancing. We had everything in place but we stayed open.

They then had the PPP loans come in for the small businesses. We attacked that and worked around the clock. We had people working all weekend, 24 hours a day making sure we gave those customers their loans. We told all of our employees, “They deserve this. We’ve been in business. They need this money. We’re saving people. We’re making a difference. We are critical.” Our people got a sense of pride because they stood in the face of adversity and they delivered. That changed our culture. People are like, “I like winning. That feels good. I like doing great things.”

We don’t apologize for it. You’re seeing our profitability and everything soar because of what we did and all these people take great pride in it. That’s been an unfortunate time but probably something that has changed the face of this bank and that will hopefully, propel us for the next 100 years is that attitude and how it came out.

Congratulations. That is a great outcome. You had a ton of impact for all of those people that needed that money but if you didn’t have that culture in place and the mindset and the vision in place first, it doesn’t feel like you probably are able to execute nearly as well. Would you agree?

If we hadn’t put some of the things in place that we had, I don’t think we’d be able to do it. We set it and everybody took a breath and we pushed forward. Luckily, the people responded well. Thank God, everybody stayed safe and healthy. That was a big part of it. We were fortunate there but then we were able to deliver on it. During a difficult time, it’s a good time. That’s usually when things are made and things happen. I always say character’s easy when things are going well but it shows up during difficult times.

Character is easy when things are going well, but it shows up during difficult times. Click To Tweet

I’ve seen that in all my experiences in building companies. Bill, congratulations on all the success, first of all. Thank you for your time. I’m amazed at what you have been able to do at the community bank level, which is not always easy to innovate and be forward-thinking. Well done. I look forward to staying in touch with you.

I appreciate it. Thanks for having me on, Joe. I wish you all the best too in the rest of 2022.

 

Important Links

 

About Bill Hufnagel

EXIN 5 | Values Based BankPresident/CEO at Dart Bank.